What is Audit Procedures? Auditors will use SAS 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, to make going concern decisions. AS 2415 does not require auditors to design audit procedures solely to identify conditions and events that, when considered in the aggregate, indicate there could be substantial doubt about the entity's ability to continue as a going concern. You must always try and make your answers specific to any scenarios presented in the exam. PDF International Standard on Auditing 570 (Revised) Going ConcernPDF Audit Procedures Related to the Going Concern Assumption In an interim review, by contrast, the procedures are both more limited and more . Going Concern and Audit Engagements - bccpa.ca 8. Going Concern and Audit Engagements. 3 The audit of receivables. Mwakalobo GOING CONCERN Planning the Audit and Performing Risk Assessment Procedures In obtaining an understanding of the entity, the auditor should consider whether there are events or conditions and related business risks which may cast significant doubt on the entity's ability to continue as a going concern. The auditor's conclusion as to whether substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time remains or is alleviated. a) Explain the audit procedures that the auditor of Medimade should perform in assessing whether or not the company is a going concern. viewed as providing assurance as to an entity's ability to continue as a going concern. This may arise from our risk assessment procedures or while performing our subsequent assessment of the appropriateness of applying the going concern assumption. Analyitical review procedures and going concern Under ISA 570 Going concern, a material uncertainty related to going concern exists when 'the magnitude of its potential impact and likelihood of occurrence is such that, in the auditor's judgment, appropriate disclosure of the nature and implications of the uncertainty is necessary' to meet reporting framework requirements. ISA 570 (REVISED), GOING CONCERN Additional Audit Procedures When Events or Conditions Are Identified 16. This guidance includes increasing the number of experienced audit partners consulted during the audit of Going Concern, expanding the range of audit procedures (such as re-performing stress tests, as well as probing the reliability of underlying data and assumptions) and providing additional training and support to teams for COVID-19 related . General purpose financial statements are prepared on a going concern basis, unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. Covid-19: A (going) Concern for Auditors? The decision about which audit procedures to use to achieve a particular audit objective is based on the auditor's judgment about the expected effectiveness and efficiency of the available audit procedures in reducing the assessed risk of material misstatement at the assertion level to an acceptably low level. Audit procedures are designed to reflect the unique risks of an audit and the nature of items and assertions under scrutiny. Substantial Doubt About the Entity's Ability to Continue as a Going Concern.20 Based on the audit evidence obtained, the auditor should conclude whether,intheauditor'sjudgment,thereareconditionsorevents,consideredin Revised going concern standard - ISA 570 Revised - KPMG ... If events or conditions have been identified that may cast significant doubt on the entity's ability to continue as a going concern, the auditor shall obtain sufficient appropriate Going Concern Evaluation Checklist This five-step checklist is intended to provide an example of questions for management to consider when performing its evaluation of an entity's ability to continue as a going concern. The Enron scandal was successful concocted by the connivance of some Enron officers and the external auditors. Additional Audit Procedures When Events or Conditions . entity's ability to continue as a going concern. Audit Procedures.05 It is not necessary to design audit procedures solely to identify condi-tionsandeventsthat,whenconsideredintheaggregate,indicatetherecouldbe substantial doubt about the entity's ability to continue as a going concern for a When the long-term viability of a borrower is doubtful, it may cause the CPA to issue a qualified audit opinion — or, worse, to withdraw from the job altogether. Going concern auditing considerations - outlines the auditors responsibilities in relation to the evaluation of company's going concern; 4. This SAS is effective for audits of financial statements for periods ending on or after December 15, 2017. Rather, the auditing standard suggests that the results of auditing procedures performed to achieve . a) Explain the audit procedures that the auditor of Medimade should perform in assessing whether or not the company is a going concern. SAS 132 amends SAS 126 , The Auditor's Consideration of . Financial statements are generally prepared with an assumption that . This question is asked mainly when we talk about the roles and responsibilities of management and auditor related to going concern of the company, and to answer this question, we should refer to the audit standard ISA 570.. Who Responsible for Assessing the Going Concern? Audit procedures - lists the procedures considered and performed by the auditor during the evaluation of company's going concern basis; 5. Step 1: Document conditions and events Have you documented all conditions and events, both positive and negative, that Step 1: Document conditions and events Have you documented all conditions and events, both positive and negative, that This assessment is often carried out in conjunction with preliminary analytical procedures. Additional Audit Procedures When Events or Conditions . • The appropriateness of the use of the going concern assumption is a matter for the auditor to consider on every audit engagement. Back to Resources. ISA 570 requires the auditor to consider going concern at the early stages of the audit, in particular when performing risk assessment procedures at the planning stage. Audit Procedures Related to the Going Concern Assumption Old New Confirm whether there are events or conditions that may cast significant doubt about the going concern assumption Evaluate the reasonableness of management's assessment and their response/management plan, etc. The auditor's procedures around the going concern assumption are therefore receiving an increasing focus and consideration by audit teams, particularly for engagements that are well-in-flight and in the concluding phase (i.e., just ahead of financial statements being formally issued). Auditing going concern 10-06-2020 Auditors test the appropriateness of the use of the going concern basis for financial statements. For the auditor, greater audit effort will be required, resulting in additional time . The external audit staff of Enron's external auditing firm, Arthur Andersen, succumbed to the influential request of the Enron . If events or conditions have been identified that may cast significant doubt on the entity's ability to continue as a going concern, the auditor shall obtain sufficient appropriate A14-A15) Additional Audit Procedures When Events or Conditions Are Identified 16. Substantive procedures Substantive Procedures Substantive procedures are methods designed by an auditor to evaluate a company's financial statements, which require an auditor to create conclusive evidence for verifying the completeness, accuracy, existence, occurrence, measurement, and valuation of the business's financial records. Other procedures that the auditor may adopt to establish whether the use of the going concern basis of accounting is appropriate in an entity's particular circumstances could be: Reading minutes of shareholders' meetings to identify any current, or potential, cash flow difficulties. If events or conditions have been identified that may cast significant doubt on the entity's ability to continue as a going concern, the auditor shall obtain sufficient appropriate audit evidence to Audit Procedures are steps performed by auditors to get all the information regarding the quality of the financials provided by the company, which enable them to form an opinion on financial statement whether they reflect the true and fair view of organisation financial position. The auditing procedures performed and evidence obtained to evaluate the significant elements of management's plans. 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